No new tariffs for Canada. But uncertainty causes London businesses to 'play defensively'

Although Canada has been spared in U.S. President Donald Trump's latest tariff announcement, businesses in London say there's still uncertainty around what comes next and it's made it hard for them to plan ahead.

Trump on Wednesday announced a set of global reciprocal tariffs on imports from dozens of countries, including "a minimum baseline tariff of 10 per cent" on all goods coming into the U.S. However, goods compliant with the U.S.-Canada-Mexico Agreement (USMCA) will be exempt.

The White House said there will be no more across-the-board levies applied to Canada than what has previously been announced and no additional baseline tariffs. But Trump did go ahead with slapping 25 per cent tariffs on all fully assembled foreign-made vehicles and some parts.

The changes will have a profound impact on the local economy as businesses struggle to make decisions around orders, suppliers and staff, said Graham Henderson, head of London's Chamber of Commerce. 

"One thing is clear — it's not good for the markets, it's not good for business confidence, it's not good for the consumer, it's not good for anybody," he said.

"London is a bigger manufacturing hub than I think many people give us credit for. So, this is absolutely having an impact on London and we know already there's layoffs taking place and that people aren't placing orders because they're uncertain of the price."

Trump slapped a 25 per cent tariff on Canadian goods (and 10 per cent on energy) last month, supposedly in response to drugs and migrants coming into the U.S. across the northern border, but made some exceptions for importers who can prove the products they're bringing in from Canada are compliant with USMCA. 

Will Willemsen's Sunripe Freshmarket has two locations in London and one in Sarnia. The independent grocer buys lots of fruits and vegetables from the U.S., but Willemsen said fluctuating tariff announcements are disrupting already struggling supply chains from the COVID pandemic.

"I think everyone's just confused and a lot of contracts are getting cancelled because no one really knows what's going to happen," he said about some suppliers he's dealt with. 

"There's a lot of variables here and what happens is that you just shut down. You don't want to make any investments or take any risks so instead of playing offensively, you play defensively."

Willemsen said he's purchased oranges from Florida for many years, but has recently started buying them from Egypt and Morocco instead, adding that he's trying to find more Canadian and European suppliers.   

London planning to reduce red-tape for businesses 

Tariffs placed on Canadian steel and aluminum also remain in place and some local craft breweries are concerned it will drive up the cost of their input materials. 

"Luckily, we do source most of our grain from Canada  but it would be cans with the aluminum tariffs that the prices could definitely go up, or the supply chain could get disrupted." said Gavin Anderson, president of Anderson Craft Ales in London.

"We've just been trying to make sure that we have Canadian supplies lined up and ready to go, and just have a stockpile of cans to make it through the next little while, and hopefully this gets sorted out soon. But I don't think there's any guarantee of that."

In an effort to support the local economy, the City of London plans to update its Industrial Land Development Strategy to use that land for companies provincial and federal governments are trying to recruit to Canada. The city also wants to amend zoning bylaws that would reduce red tape for home-based businesses, such as meal boxes and tiffin services.

"Let's bring those jobs here to London. This is something we can do to turn a difficult situation into a great opportunity," said Mayor Josh Morgan. Both directives require full council approval. 

"We know the economy is likely to struggle through any sort of trade dispute, so we want to bolster the economy at the base level, including for those who are trying to make a couple extra dollars by doing some home-based businesses, particularly in the food sector."

Meanwhile Willemsen's biggest worry is how the Canadian government will respond because reciprocal tariffs on imported American goods will increase costs for him and his customers. 

"The one thing they shouldn't tax is food because the average person is already struggling and if they're going to apply taxes, they should do it on other commodities except food," he said. 

Prime Minister Mark Carney will present Canada's plan to address the tariffs later today.